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The Goldman Sachs Internet Index rose 1.9 percent, after dipping 5.1 percent Monday. When the markets close on Thursday, the 16-stock index will become an 18-stock index to reflect the addition of EBay and Amazon.

The Amex Internet Index lost some early morning gains but managed to close up 1.9 percent. The index lost 3 percent Monday.

Offline and online

With retailers expected to ring up $4 billion in online sales this holiday season, traditional retailers are making sure they're prepared for the demand.

Office Depot and Williams-Sonoma inked a deal to get that cyber support from AskJeeves
askj
The pact sent shares of the provider of simple language search technology up 5 3/4, or 17 percent, to 40 1/4.

AskJeeves' technology will serve to provide customer support or help consumers make buying decisions at the Office Depot and Williams-Sonoma virtual stores.

The retailers join a number of companies that currently use AskJeeves' corporate question answering service, including ETrade
EGRP, -0.52%
BellSouth
BLS, -8.33%
Compaq Computer
cpq
Dell Computer
dell
and ETrade
EGRP, -0.52%
The corporate service accounts for more than 30 percent of AskJeeves' sales, up from 6 percent in the first quarter of this year.

Internet healthcare provider Healtheon
HLTH, -2.81%
and HealthSouth
HRC, -0.41%
are partnering to form a co-branded Sports Medicine Web site and launch a $50 million marketing campaign. Santa Clara, Calif.-based Healtheon provides B2B and C2B e-commerce services that connect doctors and consumers with healthcare institutions. HealthSouth is a provider of outpatient surgery and rehab services and the company boasts of having 120,000 patients visit daily.

There are over 20 million people who look online for health information, and many of these queries are related to sports injuries, according to a statement.

Shares of Healtheon rocketed 3 5/16, or 9.6 percent, 37 11/16.

Traffic news

After rocketing some 15 percent in the past two sessions, ITurf
turf
jumped another 7/16, or 3.5 percent, to 13 1/16 after the e-tailer targeting Generation Y and provider of virtual communities for this attractive demographic said its sites reached about 13 percent of girls between the ages of 12 to 17.

America Online
aol
drifted up 1/2 a point to 90 5/8 after a positive plug by Jamie Kiggen at Donaldson Lufkin & Jenrette. Kiggen raised his September subscriber estimates for America Online to 975,000 from 900,000. This compares to 755,000 in June. Kiggen also reiterated his "top pick" rating for the Net blue chip with a $200 price target.

Kiggen raised his forecasts for AOL's North American subscribers by 6 percent but upped his projections for International members by 28 percent. Penetrating the markets beyond the U.S. is high priority for all the major portals. Lycos
lcos
and Singapore Telecommunications Ltd. have formed a $50 million joint venture to provide local Web portal sites in more than 10Asian countries. The companies will hold equal stakes in the Lycos Asia venture, which will offer local content and services in the principal language of the individual countries.

Levitan cited Media Metrix numbers that showed EToys maintaining its reach against Smarterkids.com, which recently filed for a $60 million initial public offering. According to the statistics, EToys also surpassed KBkids.com, which is part of Consolidated Stores
CNS, -0.87%
Toys R Us
TOY, -0.40%
and ShopTLC, the Learning Company's online store. The Learning Company merged with Mattel
MAT, -2.34%
earlier this year.

Levitan expects EToys' launch of Sega Dreamcast to help accelerate traffic this month.

On Monday, Chris Vroom, an Internet analyst at Thomas Weisel Partners, reiterated his "strong buy" rating and set $80 12-month price target. "The business momentum of the company is strong and the company should enjoy the best sales growth year-over-year and sequential of any e-commerce company," Vroom told CBS.MarketWatch.com.

Vroom is still optimistic that despite a seasonally slower time for toy sales, EToys sales could grow to $11 million in the current quarter, up 35 percent sequentially and 1600 percent year-over-year.

Amazon's sequential growth two years after launch was a bit slower. "EToys is tracking at a similar to slightly better growth rate at a comparable age to Amazon," he said.

Dazed and confused

ExciteAtHome
ATHM, -1.95%
rose 1 1/4, or 3.3 percent, to 39. BancBoston Robertson Stephens analyst Michael Graham pounded the table on the stock, particularly at current levels. Graham, in a note to clients, said he continues to believe that the stock reflects "confusion or discounting a stark scenario, which we believe is unlikely to occur.

"We believe it is highly unlikely or impossible for AtHome's exclusive contracts with its cable partners to be rewritten on terms unfavorable to AtHome.

Turning up roses

1-800-Flowers.com
FLWS, -2.50%
bloomed by 1, or 6 percent, to 17 5/16 after extending its relationship with AOL. The Westbury-based florist inked a $37 million marketing pact to be the exclusive florist across all of AOL's brands. The deal gives the retail florist, with roots as a single floral shop in Manhattan more than twenty years ago, access to AOL's multi-million subscriber base in the U.S. and overseas.

"This should increase the company's brand awareness," said Ryan Alexander, an e-commerce analyst at Wit Capital. "Additionally, it should allow 1-800-Flowers to expand its merchandise product offerings, such as gourmet foods and home and garden-related items."

At its current $1 billion market cap, 1-800-Flowers is trading at 3 times next year's sales, based on Alexander's estimates. Online sales are expected to account for about 30 percent of next year's revenue.

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